Navios Maritime Holdings Inc.

Navios Maritime Holdings Inc.

$5
0.41 (8.93%)
New York Stock Exchange
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Marine Shipping

Navios Maritime Holdings Inc. (NM-PG) Q1 2016 Earnings Call Transcript

Published at 2016-05-25 14:12:07
Executives
Angeliki Frangou - Chairman and CEO George Achniotis - CFO Tom Beney - SVP, Commercial Affairs Ioannis Karyotis - SVP, Strategic Planning
Analysts
Noah Parquette - JPMorgan Herman Hildan - Clarksons Platou Securities
Operator
Thank you for joining us for Navios Maritime Holdings First Quarter 2016 Earnings Conference Call. With us today from the Company are Chairman and CEO, Mrs. Angeliki Frangou; Chief Financial Officer, Mr. George Achniotis; SVP of Commercial Affairs, Mr. Tom Beney; and SVP of Strategic Planning, Mr. Ioannis Karyotis. As a reminder, this conference call is also being webcast. To access the webcast, please go to the Investors section of Navios Maritime Holdings' website at www.navios.com. You'll see the webcast link in the middle of the page and a copy of the presentation referencing today's earnings conference call will also be found there. Now I'll review the Safe Harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Holdings. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Holdings' management and are subject to risks and uncertainties which could cause actual results to differ from the forward-looking statements. Such risks are more fully discussed in Navios Holdings' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Holdings does not assume any obligation to update the information contained in this conference call. The agenda for today's conference call is as follows. We'll begin this morning's conference call with formal remarks from the management team and after we’ll open the call to take questions. Now I'll turn the call over to Navios Holdings' Chairman and CEO, Mrs. Angeliki Frangou. Angeliki?
Angeliki Frangou
Thank you, Laura. Good morning to all of you joining us on today's call. For the first quarter of 2016, we recorded revenue of $101.5 million and an EBITDA of $45.4 million. Slide 3 provides the company highlights. Navios Holding controls a diverse fleet of 61 modern vessels with an average age of 7.5 years. The fleet 8 is about 12% than the industry average while perhaps [efficient in-house] [ph], the use of our fleet will be important when the market dense. We have developed fee income statements because of our size. We have operating leverage from our world class group of employees and passenger capabilities. Because of this discipline our operating expense is 42% below the industry average. Slide 4 highlights our current corporate structure. Navios volume derived from five areas. The dry bulk fleet of Navios Holdings and four principle operating entities. The market is running the total as listed on some of the public part. Navios Holdings [indiscernible] in NMM, NNA a worth of $1.30 per share which in itself is more than NM's guidance share price. Slide 5 shows our strength through diversifying the value sectors of logistics. Navios Holdings invest directly in the dry bulk. NM's the other companies have invested in dry port containers and dry bulk. Each of the companies have strong balance sheet, good cash flows and generally favorable invested dynamics while the value of these entities may not be guaranteed appreciated by the market we believe that the basic value of this components will be recognized overtime. For example NNA trades well below NAV and for the price of less than three times 2015 earnings. We believe that at some point investors will recognize the favorable prospects of the tanker sector similar recognitions will be due to Navios Partners, Navios South American Logistics, and Navios Midstream. Slide 6 provide a strategic review of EBITDA which have experience a most difficult market that has ever existed in shipping highlighted by the Q1 low of 290. Q1 2016 EBITDA low was 43% lower than the all time low established only one year ago while extended period of weakness in the dry bulk industry is unprecedented EBITDA has recorded by 113% and is currently at 618 suggesting that the nuclear winter maybe towards an end. The global fleet is coming into balance, scrapping is forecasted to reach $52.6 million or 6.8% of the global dry bulk fleet easily surprising the prior record of 6.4% set in 1986. Moreover, new orders were only 18 million metric tonnes in 2015 and 12.3 million metric tonnes in 2016. Cancellations of slippage of new building deliveries average about 40% over the past full year in 2016 is about 55% because of this particular combination of scrapping slippage and new building orders, investment shortage anticipate flat to negative fleet, net fleet growth in the dry bulk industry in 2016 and 2017. Slide 7 will show how we have positioned NM to where that current difficult market. NM had a solid Q1 performance adding $45.4 million in EBITDA an increase of 73% compared to the same period last year. Our balance sheet is strong with $156.6 million of cash as of March 31, 2016. Our balance sheet is flexible with about 83% of our total debt in bonds that have no loan to value maintenance covenants. We also worked hard to improve our liquidity in the first quarter. We received $14.9 million for early settlement of charter claims and we further benefit from a $23 million decrease in certain charter-in cost over the next 12 months. Moreover, we reduced NMs G&A expense by an estimated $7 million for the year. And of course we expect to receive 14% similar in annual divided from Navios acquisition. More fundamentally or public affiliates are strong on an ongoing forward basis NM will no longer be required to fund working capital nature of this company, a significant change from only a short while ago. We are also very proud of our overall cost management as witnessed by reviewing SG&A and operating expense. Today SG&A per available daily basis makes us one of the lowest compared to our publicly listed shipping peers and we are constantly reducing our cost. On a run rate basis, we expect to reduce 2016 G&A by approximately 35% or $7 million to $30 million. In addition, Navios Holdings' operating expenditures is 42% less than the industry average as measured and defined by duration. These savings do not include debt expense that certain peers charge and allow charter [indiscernible]. We have created a flexible charter-in strategy with 81.4% of our fleet available days fixed for the nine months to year-end 2016 and 34.1% of our fleet available days fixed for 2017. Finally, we have significant invaded volume in unencumbered assets of our ownership interest in NNA, NMM, Navios Logistics, Navios Europe I and Navios Europe II. On a market-to-market basis generally in growth -- the growth in the increasing value of these assets or any control premium this group of assets is likely worth $700 million. Slide 8 highlights our strong liquidity position. Our conservative balance sheet has net debt to more capitalization of 56.3% and cash of $156.6 million. As to our cash requirements, the Company has no committed shipping growth CapEx and no material debt maturities until 2019. Slide 9 provides an overview of our operating leverage. Unlike many of our competitors, we manage our vessels in-house thus enjoy cost savings as with scale and increased purchasing power. As a result NM OpEx is among the lowest in the industry resulting approximately $74.2 million in an annual operating expense savings. Navios Holdings shares its economy of scale with its public affiliate. We provide technical and commercial management services to our public affiliate for a fixed fee and administrative share this is at cost. Importantly, we do not charge any currency as actual fees whether for originating loans, arranging sales and purchase or otherwise creating volume. The premise of the overall relationship is that there is a fair allocation of cost in the pricing of services on terms and conditions that said party generally would agree. Slide 10 sets for Navios low-cost structure. From Q2 through Q4 of 2016, we have fixed 81.4% of our available days including our index-linked days at an average contracted daily charter-out base rate of $9,599 per day. For 2017, we have expected 4.1% our available days at an average contracted daily chartered-out base rate of $15,416 per day. Our fleet open days plus base contracted with index-linked charters could provide incremental revenue with an improving charter market. We also expect to receive about $11 million in dividend from Navios acquisition for the nine months till the year-end 2016 and $14.6 million in dividend from Navios acquisition in 2017. I would like to remind you as I do in every quarter that our breakeven analysis includes all operating expenses, dry dock expense, charter-in expense for our charter-in fleet, G&A expenses as well as interest expense and capital repayment. I would like now to turn the call over to Mr. Tom Beney, Navios Holdings' Senior Vice President of Commercial Affairs, Tom?
Tom Beney
Thank you, Angeliki. Slide 11 presents our diversified dry bulk fleet consisting of 61 dry bulk vessels totaling 6.3 million deadweight split between Capesize, Panamax and Supramax. We continue to be one of the largest U.S. listed dry bulk operators in the world, established over 60 years ago. We have 57 vessels on the water with an average age of 7.5 years. This is 12% younger than the industry average. Navios Group's total fleet of a 160 vessels includes 49 tankers, 20 container vessels and 91 dry bulkers. Turning to Slide 13, GDP forecast for 2016 and 2017 suggest continued demand. Emerging market growth, predominantly in the Asian region drives dry bulk demand. In the largest oil-consuming economies such as China, India, Japan, Europe and the USA, low energy prices tend to stimulate GDP growth overtime, further aiding the dry bulk market as was experienced in the late ‘80s. Between 2001 and 2015, well, dry bulk trade has increased 5.6% CAGR. Turning to Slide 14, iron ore, coal and grain are the three main dry bulk commodities and represent about 63% of total dry bulk trade for us. Trade in these commodities grew at an annual rate of about 177 million tons 2010 through 2014. The contraction in these commodities in 2015 was driven by an approximate 56 million ton decline in seaborne coal. So far in 2016 we have seen the rate of decline in world coal trade decrease indicating the worst of the coal market, maybe behind us. Minor bulks which make up the remainder of dry bulk trade grew by about 1% in 2014 and 2015 resulting in dry bulk demand remaining flat 2014 to 2015. In 2016, total dry bulk trades are forecasted to grow by approximately 1%. The first quarter of 2016 lived up to its reputation as a seasonal low. We started the year of 473 BDI after a disappointing Q4 of 2015. By February, 10 the BDI fall into 290 as historical -- historically low level. Iron ore and coal shipments typically reduce at the start of the first quarter, but with the Chinese New Year celebrations fair from negative Chinese economic reports and a warmer winter in the Northern Hemisphere, the downturn was exaggerated. Low steel production in China in January and February, an increase supply chain efficiency contributed to dramatic low drive freight levels. As we mentioned in our Q4 earnings, steel production in China typically picks up in the second quarter. In 2016 increased Chinese steel production started March and continued through April. Steel mills increased production for the peak construction season in the second quarter. The Chinese government continues to stimulate domestic markets by increase loan initiations helping the housing market to recover. House prices in the majority of Chinese cities increased year-on-year during the last few months. Fair of a Chinese economic hard landing have receded with March Chinese purchasing managers index rising for the first time since July last year. Demand for agricultural products in Asia has remained very strong. The BDI rose to 715 on April 27 and the since set back to 618 well above the lows. Please turn to Slide 15. As shown in the right-hand side table, overall worldwide seaborne iron ore is forecasted to grow by 1.3% in 2016. China accounts for over 60% of the world's seaborne iron ore imports. Steel production in China decreased by approximately 2.3% for 2015 versus 2014 and looks likely to reduce by similar amount in 2016. However there is continued demand for imported iron ore in China. Chinese iron ore mines cannot compete with the high-quality oil coming from Australia and Brazil at current low prices. In January, international iron ore prices dipped to about $0.40 deliver to China a level well below the cost of Chinese domestic iron ore production. Chinese seaborne iron ore imports increased in 2015 by 3% at the expense of domestically produced iron ore, which contracted by about 8%. That trend has continued. For Q1 2016 Chinese iron ore imports have increased by about 7% and domestic production of iron ore has reduced by approximately 6%. Australia and Brazil will maintain or grow market share in China and exports from Canada, Sweden, South Africa, Chile and others are likely to decline. China exported a record 111 million metric tons of steel during 2015 versus 92 million metric tons in 2014. So far in 2016, Chinese steel exports are up 8%. In Slide 16, we see as of January 1, the 2016 order book stood at 92.7 million deadweight; by end April, the latest full month statistics 21.1 million deadweight had actually delivered versus 45.1 million deadweight, which was expected a 53% non-delivery rate by deadweight, the highest non-delivery rate in the last few years. If we assume a more conservative 40% non-deliveries then we estimate 2016 we'll see about 55.6 million deadweight actual delivery. With the current 2016 scrapping rate annualized, net fleet growth could be de minimus this year. The order book as of January 1 reduces dramatically in 2017 as shown on the slide. With freight rates and second-hand asset value -- values also low, there is currently little to no-incentive to place additional new building orders. Turning to Slide 17, the scrap inflation place year-to-date is 20.3 million deadweight. Scrapping annualized would be about 52.6 million deadweight for 2016, an all-time record. There is a normal slow down is scrapping due to the monsoon season, which starts shortly and continues into the third quarter but with current low freight levels, the high level of scrapping can continue. The Capesize fleet in 2016 has contracted by 11 vessels as 61 vessels of scrap versus 50 delivered. The cumulative total for 20145 and year-to-date 2016 is minus 18 vessels. The Panamax fleet in 2016 has contracted by 21 vessels, a 77 vessels scrap versus 56 delivered. The cumulative total for 2015 and year-to-date 2016 is plus 7 vessels. Net trend was negative fleet growth becomes more compelling as the order book in 2017 reduces and next rotations are that non-deliveries and scrapping will continue. Slide 18 gives an illustration of the growing scrapping pool. The average age of scrapping has reduced to about 23 years from about 32, five years ago. During the last 12 months, we have regularly seen vessels scrap to 20 years around and recently a number of 15-year old dry bulk vessels have scrapped. And extended low rate environment encourages are in the scrap younger vessels as the age reduces so the scrap and pool increases and the right-hand chart shows the current scrapping pool. Vessels are 20 years or over 61 million deadweight or about 8% of the total dry bulk fleet growing to approximately 124 million deadweight or 16% of the total fleet for vessels fifteen years or more. Slide 19 is a recap of the trends and delivery scrapping in net fleet growth since 2009. As we've discussed scrapping is running at a record high annual pace, non-delivery is also running at a record high. Net fleet growth has reduced from a peak in 2010 of over 14% to last year's low of 2.3%. If scrapping and non-deliveries continue than 2016 could end with flat to negative net fleet growth and with the order book staying low for 2017, the fleet should contract further. The dry bulk demand rising in 2016, the market fundamentals should improve going forward. I would now like to turn the call over to our CFO, George Achniotis for the Q1 financial results. George?
George Achniotis
Thank you, Tom, and good morning. Please turn to Slide 20 for the review of the financial highlights of the first quarter of 2016. EBITDA in the quarter was $45.4 million compared to $26.2 million in 2015. The increase is mainly attributable to about $15 million compensation from the early settlement of charter claims and about $4 million increase in our share of the EBITDA of Navios South American logistics. The increase in EBITDA was achieved despite the fact that the BDI reached an all-time low during the quarter. Net loss for the quarter was $7.5 million compared to loss of $26.7 million in 2015. The improvement is mainly attributable to the increase in EBITDA and a $1.4 million decrease in depreciation and amortization. As a result of our put in chartering strategy, we achieved at TC rate of $7008 per day, only 3% below the rate achieved in Q1 of 2015 despite the fact that the average BDI dropped by over 40% over the same periods. Please turn now to Slide 21, where with the balance sheet highlights are presented. We continue to maintain a healthy cash balance. As of March 31, 2016, the cash balance was about $157 million compared to $177 million at the end of December 2015. The reduction is mainly due to $20 million payment for the delivery of two new building vessels in January. Bank debt increased by $41 million since the end of the year, reflecting the additional debt obtained for the two new buildings in January. Net debt to book capitalization was 56.3% compared to 54.6% at the end of last year. Over the next few slides, we'll briefly review our affiliates. Please turn to Slide 22. Navios Holdings owns just over 20% of Navios Partners, including a 2% GP interest. Navios Partners owns a fleet of 31 dry bulk and container vessels. NNM is positioned as a unique platform for growth in a dry bulk sector. Its balance sheet and credit rates are happy with net debt to book capitalization of 41.3% and interest coverage of 4.1 times. NMM has the ability to generate significant free cash flow. Even in the low tracker environment of today, it should be able to generate about $74 million in the next nine months assuming steady operating cost and current market rates for the open days. Turning to Slide 23. Navios Holdings owns just 46% of Navios Acquisition. Navios Acquisition has grown to become a leading tanker company with 38 modern high-quality vessels with an average age of 5.1 years and NA is also the sponsor of Navios partners. All the vessels are on the water and are generating cash flow. The fleet is 95% fixed for 2016 and 53% fixed for 2017. Navios Acquisition had a great quarter with net income of $23.8 million, approximately 19% higher than the same period in 2015. Adjusted EBITDA increased by 3.5% to $55.8 million representing a run rate EBITDA of $223 million for 2016. This concludes my presentation. At this point, I will turn the call over to Ioannis Karyotis for his review of the Navios South American Logistics results. Ioannis?
Ioannis Karyotis
Thank you, George. Slide 24 provides an overview of the Navios Logistics business and Slide 25 presents the Company's highlights. Please turn to Slide 26. As we have already announced, Vale has advised in writing that they will not perform a 20-year take-or-pay service contract for the iron ore facility currently under construction in Nueva Palmira, Uruguay. We believe Vale's position to be without merit and consider that the contract remains in force. We continue the construction of the new terminal and as of Q1 2016 we have paid approximately $65 million. In addition we have remained in constructional obligations of about $77 million. In total, we have paid or incurred approximately $142 million out of a total budgetary CapEx of approximately $150. The expected minimum annual EBITDA under the take-or-pay contract with Vale is $25 million. The contract is running slow and Vale phase to perform we will take legal measures to enforce our right under our contract. In addition to the 20-year contract for the new port terminal, we have several COAs and time charters for the transportation of minerals without barge with Vale. All our contracts are under English or New York law. We currently have an dispute with Vale regarding the termination date of one COA contract which is under arbitration in New York. The final award for this case is expected in autumn. We have received full security for our claim after date. In the recent past our barge business focused on iron ore transportation due to increase demand from our clients. Yet we have also been transporting grains continuously since the inception of our company. Our main competitor in the grain barge transportation sector has been in restructuring process since the end of 2015. This creates an opportunity to strengthen our footprint in the transportation of grains in the Hidrovia. Slide 27, reviews our results. In the past five years Navios Logistics EBITDA has been growing at 20% CAGR. In the first quarter of 2016, EBITDA increased 35% to $21.1 million. Looking at the port segment revenue decreased 40% in Q1 2016 compared to the same period of last year. The decrease is attributable entirely $10.5 million lower sales of liquid product, the low margin opportunistic trading part of our liquids port activity. This decrease in revenue did not affect EBITDA that increased 3% to $5.6 million. Barge segment EBITDA increased by 80% to $11.6 million. The increase is attributable double to higher revenue due to more liquid and dry cargo transported, lower volume expenses and reduced operating expenses mainly due to a reduction in repair and maintenance and personal cost. Cabotage business EBITDA increased by 6% to 4 million, from $3.7 million in the same period last year. Net income in Q1 2016 was $5.7 million compared to $0.8 million in the same period last year due to the increase in EBITDA that was only partially mitigated by $1.2 million higher income tax expense. Please turn to Slide 28. Navios Logistics has a strong balance sheet. Cost at the end of Q1 2016 was $89.4 million compared to $81.5 at the end of 2015. Net debt to book capitalization was 42% unchanged compared to the end of 2015. As of March 31, 2016 we have drawn approximately $11 million net under the unsecured export financing facility related to the new iron ore terminal. The undrawn amount under this facility was $29.3 million including interest and non-related cost. This facility has an 8 year term. Now, I would like to turn the call back to Angeliki.
Angeliki Frangou
Thank you, Ioannis. This completes the formal presentation and we open the call to questions.
Operator
[Operator Instructions] Your first question comes from the line of Noah Parquette of JPMorgan.
Noah Parquette
Thanks for taking my questions. I just want to start with your charter-in, you've done - you've made some good progress on this - I think the rate was 14,000 a few months ago and now it's 11,600 for the rest of the year. That's a pretty big cash flow savings. Can you just talk about a little bit how you accomplish that, there's more room and maybe some guidance on 2017?
Angeliki Frangou
I think it's very clear, we achieved this $23 million reduction - the number of everything that is on the charter-in and it represents 12 months from Q2 forward.
Noah Parquette
Okay. Can you give some color on 2017?
Angeliki Frangou
I mean the rate is applying in Q1 - until Q1, so it's 12 months starting from March 2016.
Noah Parquette
Okay. And then to the $14.6 million early settlement of charter claims can you give a little bit more information on that, is that all related to the ships that were chartered to NMM or how do we think about that?
Angeliki Frangou
No, NM affiliate - bottom is the combination with COAs and other claims that we settled and it was an attractive deal we did at point of low rate environment. So it produced the best result.
Noah Parquette
Okay. And just moving on to the Vale contract in the port business, I think so you given the color on the CapEx, so if I'm reading that right, you’ve spent how much in CapEx in Q1 was about $20 million on the port business?
George Achniotis
Yes, we declared it was $47 million at the end of the year and it was up $65 million at the end of March.
Noah Parquette
And then the $77 million that you’ve incurred what’s the kind of time frame for one that will be paid?
Angeliki Frangou
The construction completion of the port is at end of the year. So what you have is that you have $142 million that it have been in Q1 of paid and that has to -on the total CapEx of [$100] [ph] million estimate.
Noah Parquette
Okay. So but just to be clear, so Vale has - so they're not going to perform with - you're going ahead with the build out of the port right in full?
Angeliki Frangou
We have a contract under English law, it has a take-or-pay 20 years. We know we’ll collect a minimum of $35 million per year for the next 20 years completion of the port in end of the year.
Noah Parquette
Okay. And then have you given any thought to selling a stake in logistics at all to help fund that or are you comfortable with your ability to fund the rest remaining CapEx?
Angeliki Frangou
We have sufficient cash in our balance sheet, and we do not see problem in that. And we see the Navios Holdings, I mean our overall Navios Holdings in the time - I mean let's not forget we have been most different this quarter in shipping, I mean that it was different of a nuclear winter, with 40% law NV and dry bulk low we produce solid results and it [indiscernible]. And with the cost savings of them, we can really and today and in capacity of our vessels of around $7.5 million you’re going to see through 2017 without a problem. So in Navios logistics is - we were able to cover CapEx.
Noah Parquette
Okay. And then just one really quick modeling question. The depreciation kind of fell pretty significantly is that a good run rate going forward and what drove that fall?
George Achniotis
Yes, you can use that earnings for the rest of the year.
Noah Parquette
All right. Thanks.
Operator
Your next question comes from the line of Chris Wetherbee of Citi.
Unidentified Analyst
Good morning. This is Prashant in for Chris. Just starting with Vale, wanted to - I know you're still in dispute with that, but just wanted to get a sense of how contract settlement might work there or if there's any precedent we should look to in terms of cash upfront or partial performance or any additional color on sort of just thinking about cash flows there that you give would be helpful?
Angeliki Frangou
The contract is a 20 year contract, $4 million take-or- pay. So, as we have stated we believe that these contract remains in force and as whole claim position of Vale's without met. So you know that no matter what is 20 years that we give you $35 million of EBITDA over that period.
Unidentified Analyst
Okay. So the full amount is sort of what we should be thinking about, there a haircut to that would be, like an exception, just to be clear.
Angeliki Frangou
We have a valid contract and we will collect under the contract.
Unidentified Analyst
Okay, excellent. And on the savings on the OpEx - on the vessels that was impressive for the rest of the year and just to follow-up on those question, I know that you said the charter-in savings are through the end of 1Q 2017 is that - I am assuming that holds true for the OpEx savings on the rest of the fleet as well?
Angeliki Frangou
The savings on the OpEx is pretty substantially. We have seen this as a consistent strategy and we have done - so this actual as you can see in within that forecast for the remaining of the year. The cost reduction on charter-in is correctly until a Q1 2017.
Unidentified Analyst
Okay. And then the rest of the vessels would be, extend our further the cost savings or should we expect on sort of escalation in 2017.
George Achniotis
No, the cost savings on the OpEx are fixed from now on for the future unless there is some inflationary pressures on any type of asset, of expenses under the OpEx, we don't expect to see an increase either this year or next year.
Unidentified Analyst
Okay, great. Thank you guys for that detail. And just a last question in terms of vessels secured towards - notes given that where vessels values are. You're not saying that this is – that it would be necessary but if additional collateral is needed first half would it be needed on any of the secured notes given where vessels values are. And then secondly with moving assets from logistics to holdings be when option is needed?
Angeliki Frangou
There is no need because there is no loan to value, I mean this is actual note, there is no loan to value canceled. Therefore there is no need for any additional security. And in our bank facilities we are in compliance.
Unidentified Analyst
All right, excellent. Thank you so much for the time, I appreciate it.
Operator
Your next question comes from the line of Herman Hildan of Clarksons Platou Securities.
Herman Hildan
Good afternoon, thanks for taking my questions. Lot has been covered, but just curious, how much did Vale contribute to EBITDA and logistics in 2015?
George Achniotis
We are not reporting EBITDA by client. What we have reported is the share of revenue fair value in our total revenue it was about 28% in 2015.
Angeliki Frangou
And you have the port segment on the different side I mean if you see I think that will give you a lot of clarity. The port - how much the EBITDA from the port versus barge business versus Cabotage.
Herman Hildan
Okay. Thank you. And also I mean I still assume that you have contract - you are very comfortable with Vale and is it possible to give you some color on what kind of communication has been between you and Vale after they sent the notification in March. Has there been any other, any further dialogue or has that been basically in relation to them trying to get out of the contract?
Angeliki Frangou
There is nothing more to report. I mean there is a very simple process and we have - this is a contract we have announced in 2013. We have prepared - as we realized all the license fees, all the plans and everything has been done well in advance. So what we're seeing now is that a project that is going to be completing in 2016 now. So, there is a contract that is created long time is in force and we have - we can collect of a 20-year $35 million EBITDA per year.
Herman Hildan
Thank you. And just kind to be clear from the counterpart on the contract is Vale International correct?
Angeliki Frangou
Yes.
Herman Hildan
Yes. Thank you very much. That’s all for me.
Operator
Ladies and gentlemen, we have reached the allotted time for questions and answers. I will now turn the call to Mrs. Angeliki Frangou for any additional or closing remarks.
Angeliki Frangou
Thank you. This completes our Q1 results.
Operator
Thank you for participating in today's conference call. You may now disconnect.